USO fund can support BSNLís non-viable rural business, says Trai

New Delhi, Jan 21 The Telecom Regulatory Authority of India (Trai) on Monday issued a consultation paper on whether the access deficit charge (ADC) should be abolished from April 1. The paper will also invite suggestions on how to support BSNL after the abolition of ADC from the universal services obligation (USO) fund.

Regulators in many countries put in place the ADC regime at the time of liberalising the telecom sector to ensure sustainability of incumbents fixed-line operations in a competitive environment. In India, ADC is being levied at 1.5% of the adjusted gross revenue of all private service providers to fund BSNLís wireline telephony business in rural areas. Additionally, operators have to pay an ADC of Rs 1.60 per minute on international incoming calls and Rs 0.80 per minute on international outgoing calls.

Trai said support could be given from the USO fund to the BSNL for sustaining their non-remunerative rural operations. It is expected that if implemented after due diligence, the amendments would pave the way for lower telecom tariffs, higher growth, specially in rural areas, reduction in grey market and removal of market aberrations caused by ADC.

ďBSNL is maintaining a fixed wireline network with a large rural footprint and providing services in remote and far-flung areas. It is important that this network is sustained and expands, as fixed line operations in rural areas are crucial in the context of the information age and the need to facilitate the growth of broadband services,Ē it said.

The total support provided to BSNL till 2006-07 in the form of licence fee, spectrum charges, ADC funding and exemption on entry fee is about Rs 31,500 crore. The regulator said the idea of instituting ADC was not to make BSNL dependent on support but to allow them time for adjustment during the period of transition from monopolistic environment and era of government funding.